Black Friday, Cyber Monday, Christmas, Boxing Day. The holiday season a.k.a. ecommerce sales-mekka is here. For most brands, that means a designated strategy that focuses on converting as many of the discount-hungry customers as possible. Every year, we see e-commerce sales grow, which indicates that the massive amount of money invested in marketing by brands during this season is well spent – or does it?
Do you, for instance, know how many of the new customers that you convert on Black Friday actually return to your store afterwards and buy your products at full price? Or do you know who you should target your ads towards (and when) in order to not waste your budget on advertising towards those who decided their Black Friday purchases weeks ago?
If not, be comforted by the fact that you are far from alone. Most brands tend to be focusing so much on revenue and cost in the short term i.e. ROAS, that they forget to question what these numbers – and newly acquired customers – are worth in the long run.
If you want to get long term value out of your marketing investments, you can already start planning for next year’s holiday season now – and here’s what you should focus on:
Question how you view performance
One of the biggest traps that most brands fall into during holiday season is that they become so focused on revenue generation that they forget to ask themselves what is behind that revenue.
Where is this revenue coming from, who is making these purchases? Normally, when we speak to clients, they have an estimated amount of money they want to generate but have no idea what type of customers that are going to make a purchase i.e. new/loyal/only ones who buy on sale. This is a core question that you need to think about as this can be used to set your entire strategy.
Look at your data from previous holiday seasons
When we tell you that you should start planning next year’s holiday season now, we mean that you should already ensure that you are collecting and analysing the right data from your activities this year. There are a few core things to check for.
Percentage of revenue coming from new customers compared to before.
What happens to the customers you have now generated during this season. What is the retention rate of holiday customers compared to customers who made a purchase prior to the holiday season?
To look at what happens with the margins. Maybe margins go down but the profit goes up – it all depends on the volume that you sell.
Ensure you have the right data foundation
Depending on how deep you want to dig into the data, you have different options for getting insights that will help you plan your strategy. If you only want to look at new vs. returning customers all you need access to is your own transaction data containing a unique user identifier. With this data you can check purchases against historical data, which will allow you to segment your customers based on historical purchase behavior.
But if you want to know which channels drive new customers, you should connect your CRM data with Google Analytics. Depending on your digital maturity, this also opens up for even more sophisticated data analysis since the attribution model needs to be considered to determine the true value of each channel within the media mix. Ultimately, the goal is to understand what channels and marketing activities are responsible for activating your different customer segments.
Are old lost customers coming back for discounted products?
We always recommend our clients to segment their customer base depending on previous purchase behaviour. Normally we would segment customers based on a CLV (Customer Lifetime Value) model but we also take into account the predicted likelihood of a customer returning in the segmentation logic.
Based on the likelihood of a customer conducting a new purchase, we can create three customer segments that override the segments based on CLV. These customer segments are: customers in risk of churn, cold customers and lost customers. An interesting thing to look at during the holiday season is to see whether these customer segments return when the sales are on. If so, this would give you a chance to reactivate them and have them become loyal customers again.
Conclusion
It is easy to get stuck in looking at short term metrics during the holiday sales season. A lot of brands are missing out on the opportunity to use this rise in attention from the customers to get loyal, returning customers.
After all, most people decide in advance what purchases they are going to make on Black Friday, Cyber Monday etc. If you want to take part in the sales-mekka, you should build a data driven strategy that focuses on convincing potential new, old and existing customers to spend their money on your products outside of the sales periods.
But most importantly, you should ask yourselves, what is the long term value of the Black Friday spend? Discover our marketing evaluation services or get in touch to learn more about measuring the strategic value of marketing campaigns.
